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Australian supers sell 16,000-hectare portfolio to TIAA

CBRE, which is managing the sale on behalf of AgCap-managed SAF, says it will ‘soon’ make further announcements regarding the remainder of the fund’s holdings.

The Sustainable Agriculture Fund has agreed to sell 10 properties in three coveted Australian agricultural regions to a group of investors including TIAA-CREF.

The portfolio, covering a combined 16,000 hectares, also includes 12,500 megalitres of water entitlements, equipment and standing crops. The deal’s financials were not disclosed but it is understood that the transaction is valued at about A$110 million ($87 million; €74 million).

The properties are spread across the North Star and Darlington Point aggregations in New South Wales and the Lake Bolac region in Victoria. They were sold to a group formed of nearby local farming businesses and institutional investors, CBRE said.

The advisory firm, which is managing the sale on behalf of Melbourne-based AgCap, said it will “soon” be making further announcements regarding the remainder of SAF’s 28,000-strong portfolio, which comprises the King Island and Cradle Coast aggregations.

SAF, TIAA and CBRE did not respond to requests for comment about deal value and investment returns, though CBRE regional director Danny Thomas said that “local farming groups bid very strongly for individual assets or combinations thereof, and the institutional and corporate groups bid very strongly for aggregations or combinations of aggregations.”

“We also received bids for the total portfolio and the fund, albeit these bids were significantly exceeded by the combinations of bids for individual assets,” he added.

The transaction covers the lion’s share of the properties SAF put up for sale in March, which together represent one of Australia’s largest dryland and irrigated cropping portfolios. The fund, which owns 17 farms in total, is backed by Australian superannuation funds AustralianSuper, Australian Catholic Super, Mine Wealth and Wellbeing, the University of Melbourne and Christian Super, with AMP Capital also invested.

“AgCAP believes these transactions are in the best interest of the shareholders and our staff, and the future management of the assets,” said Deo de Jesus, AgCap’s General Manager of Strategy.

SAF’s LPs decided to go ahead with the sale despite the vehicle’s strong operational performance. Last month, the fund posted a full-year return of 18.7 percent after fees and tax – a performance it linked to both solid cash returns and capital growth. Net farm profit excluding capital appreciation stood at A$9.8 million, following on from four years of continuous growth to surpass fiscal year 2016’s A$8.8 million.

TIAA will run the property through Westchester Agricultural Asset Management, its asset management arm. The firm owns Australian farmland reportedly worth more than A$1bn. Its portfolio aggregates successive purchases made over the last five years, including a sizeable chunk of assets formerly owned by now-defunct PrimeAg Australia.